How well do your employees handle the news of an impending internal audit? Too often, there are exasperated groans whenever the word “audit” is mentioned. Rather than viewed as a punishment, however, an internal audit should be considered an opportunity to improve operations. An internal audit is a valuable tool, with the potential to increase business performance and advance policies and processes. After reviewing the following internal audit benefits, you can better understand the values and goals that you would like your business to have.
Fraud Prevention
An internal audit can offer you a closer look at your organization’s finances, comparing the details of your accounts to industry standards. Analyzing trends can uncover financial incongruences. An audit can also point out conflicts of interest within your business and any other conduct that is out of compliance. This is not a foolproof method of identifying fraud, but it is a step in the right direction, to ensure good business practices.
Establish Internal Controls
The operations of any business can be difficult to manage, but an internal audit can identify whether functions such as management practices and documentation are not only effective, but also efficient. If the official decision-making process requires extensive time and energy, it may not be supportive of your business goals and strategy. In order to establish or suitable governance of various departments, you must first detect where improvements can be made. An internal audit will showcase what processes are doing well and which ones aren’t.
Promote Reliability
An internal audit will allow your business to address problems before they become issues, resulting in loss of clientele or causing financial risk. Conducting internal audits demonstrates reliability and fairness within financial reporting, establishing your business as trustworthy.
Internal audits should be conducted on a regular basis, because they do genuinely help an organization. Internal audits identify where improvements can be made, as well as detect where things may not be going well; they prepare you for external audits, allowing you to breathe a little easier with the knowledge that you are already working to maintain compliance. Preventative actions, in all aspects of an organization, help to guarantee a successful business.
